AUTOMOBILE  LOSSES 


rublished  by  Pacific  Underwriter 
7 Montgomery  Street,  San  Francisco,  California 


Wkisx. 

AUTOMOBILE  LOSSES 

By  T.  H.  WILLIAMS 


The  object  of  this  article  is  to  deal  with  automobile 
sses  and  not  to  prescribe  the  proper  method  or  form 
contract  to  be  used.  The  present  policy  form  is 
rtainly  poorly  worded  and  some  of  its  clauses  subject 
many  interpretations,  which  will  in  time,  no  doubt, 
changed. 

Automobile  insurance  is  really  in  its  infancy  and 
mpanies  writing  this  class  of  insurance  are  passing 
rough  the  same  experience  as  that  of  the  fire  insur- 
ce  companies  during  their  early  history. 

The  automobile  contract,  while  practically  a marine 
reement  is,  however,  so  changed  that  former  court 
cisions  are  of  little  value.  Automobile  insurance  is 
very  different  from  any  other  class  of  insurance  that 
evious  experience  with  other  classes  confuses,  rather 
an  helps,  the  adjuster.  If  all  automobile  losses  were^ 
afined  to  fire,  little  difficulty  would  be  experienced, 

* a straight  fire  contract  would  then  be  used.  The 
?ft  feature,  which  is  covered  under  the  present  form 
policy,  has  produced  many  perplexing  problems,  and 
will  probably  be  years  before  some  of  the  grave 
mts  now  in  question  will  be  settled,  or  passed  upon, 
the  courts. 

Another  question  which  has  given  trouble  is  that 
! property  insured  is  not  confined  to  any  one  locality 
: is  covered  by  the  policy  wherever  it  is.  (“Within 
limits  of  the  United  States,  exclusive  of  Alaska, 
Hawaiian  Islands  and  Porto  Rico  and  Canada, 
luding  while  in  building,  on  road,  on  railroad  car  or 
er  conveyance,  ferry  or  inland  steamer,  or  on  coast- 
e steamer  between  ports  within  said  limits.”) 
Misrepresentation  as  to  any  material  fact  made  by 
insured,  his  agent  or  broker,  such  as  ownership, 
ke  and  model  of  car,  the  year  built,  whether  it  is 
d for  pleasure,  business  or  hire,  have  greater  effect 
>n  the  desirability  of  the  risk  than  in  fire  insurance, 
smuch  as  the  amount  of  insurance  and  rate  of 
mium  charged  are  based  upon  these  facts.  These 
therefore  questions  which  must  be  answered  truth- 
y,  or  the  policy  is  absolutely  VOID.  It  has  been 
held  by  several  courts,  as  you  will  see  from  the 
is  referred  to  in  this  p^iper. 

P 39538 


— 2 — 


The  constant  reduction  in  the  selling  price  of  cars 
makes  a serious  moral  hazard,  which  the  companies 
have  no  way  of  meeting.  For  instance,  during  the 
first  half  of  the  year  1915  the  Packard  car  sold  for 
$5000.00  and  during  the  last  half  of  the  year  the  1916 
Packard  sold  for  $2750.00.  Undoubtedly  every  1915 
Packard  was  overinsured.  Each  year  brings  improve- 
ments in  all  cars.  It  is  only  natural  that  people  should 
want  the  latest  model. 

The  unknown  quantity  “ MORAL  HAZARD”  in 
fire  insurance  is  certainly  bad  and  perplexing  enough, 
but  in  automobile  insurance  it  is  even  worse.  To  dis- 
courage the  crook  as  much  as  possible,  the  companies 
should  avail  themselves  of  every  protection  afforded  by 
the  policy  contract.  The  purpose  of  this  article  is  to 
call  the  companies  attention  to  the  rights  they  have  and 
the  interpretation  of  the  courts  upon  the  policy 
conditions. 

If  companies  would  insist  upon  their  agents  in- 
specting every  car  before  insuring  it,  and  that  the 
applications  be  signed  by  the  Insured  and  not  by  the 
agent,  there  would  be  fewer  losses  and  less  misunder- 
standings. 

ASCERTAINMENT  OF  LOSS 

When  a car  is  sold  by  a dealer  and  the  policy  is 
written  in  the  names  of  the  dealer  and  the  party  pur- 
chasing, the  interests  of  both  parties  are  fully  covered, 
the  purchaser  for  the  amount  paid  on  the  contract,  and 
the  dealer  for  the  balance  of  the  purchase  price. 

ADJUSTERS  should  determine  first  that  the  appli- 
cation and  policy  agree,  and  then  ascertain  that  the 
year  and  the  model  of  car  agree  with  the  policy.  The 
loss  to  the  car  can  then  be  agreed  upon,  and  the 
liability  of  the  company  determined. 

As  stated  before,  damage  by  fire  to  a car  is 
easily  fixed,  but  the  adjuster  must  bear  in  mind  that 
the  companies  are  entitled  to  “dealers”  prices  with  all 
cash  discounts  deducted. 

LOSS  by  THEFT  is  the  most  serious  problem  with 
which  we  have  to  contend  and  every  effort  must  be 
made  to  determine  whether  or  not  it  is  a theft.  TJie 
policy  reads,  lines  1 to  6: 

“Against  direct  loss  or  damage  to  the  auto- 
mobile hereby  insured  caused  by  fire  arising  from 
any  cause  whatsoever,  including  explosion,  self- 
ignition, and  lightning;  also  while  being  trans- 
ported in  any  conveyance  by  land  or  water,  against 


— 3 — 


loss  or  damage  caused  by  stranding,  sinking, 
collision,  burning  or  derailment  of  such  convey- 
ance; also  against  general  average  and  salvage 
charges  for  which  the  insured  is  legally  liable ; and 
ALSO  AGAINST  LOSS  AND  DAMAGE  IF 
AMOUNTING  TO  $25.00  OR  MORE  ON  ANY 
4 SINGLE  OCCASION  BY  THEFT,  ROBBERY 
OR  PILFERAGE  BY  ANY  PERSON  OR  PER- 
SONS OTHER  THAN  THOSE  IN  THE  EMPLOY- 
MENT, SERVICE  OR  HOUSEHOLD  OF  THE 

• INSURED.” 

The  code  of  California  defines  a theft  as  follows, 
and  the  code  of  practically  all  other  states  is  the  same ; 

Penal  Code — Section  484. — “LARCENY  is 
the  felonious  stealing,  taking,  carrying,  leading  or 
driving  away  the  personal  property  of  another.” 

Penal  Code  — Section  503. — ^‘EMBEZZLE- 
MENT is  the  fraudulent  appropriation  of  prop- 
erty by  a person  to  whom  it  has  been  entrusted.” 

" Penal  Code  — Section  532.  — “OBTAINING 
MONEY,  PROPERTY  OR  LABOR  BY  FALSE 
PRETENSES.  Every  person  who,  knowingly  and 
designedly,  by  false  or  fraudulent  representation 
or  pretense,  defrauds  any  other  person  of  money, 
labor  or  property,  whether  real  or  personal,  or 
who  causes  or  procures  others  to  report  falsely  of 
his  wealth  or  mercantile  character,  and,  by  thus  im- 
posing upon  any  person,  obtains  credit,  and  there- 
by fraudulently  gets  possession  of  money  or  prop- 
erty, or  obtains  the  labor  or  service  of  another,  is 
punishable  in  the  same  manner  and  to  the  same 
extent  as  for  larceny  of  the  money  or  property  so 
obtained.” 

The  distinction  between  these  offenses  is  clearly 
stated  by  our  Supreme  Court  in  People  vs.  Tomlinson, 
102  Cal.  19,  in  the  following  language: 

“On  the  facts,  there  must  be  a very  narrow 
margin  between  cases  of  larceny,  obtaining  money 
by  false  pretenses,  and  embezzlement,  because  the 
character  of  the  crime  depends  upon  the  secret  in- 
tention of  the  parties,  which  is  often  difficult  to 
ascertain;  but,  so  far  as  the  law  is  concerned,  the 
principles  upon  which  the  question  of  guilt  or  in- 
nocence is  to  be  determined  are  plain  and  too  well 
settled  to  justify  a review  of  authorities.  Where 
one  honestly  receives  the  possession  of  goods  upon 

• a trust  and,  after  receiving  them,  fraudulently  con- 
verts them  to  his  own  use,  it  is  a case  of  embezzle- 
ment. If  the  possession  has  been  obtained  by 
fraud,  trick  or  device,  and  the  owner  of  it  intends 

• to  part  with  his  title  when  he  gives  up  possession, 
the  offense,  if  any,  is  obtaining  money  by  false  pre- 
tenses. But,  where  the  possesion  has  been  obtained 
through  trick  or  device,  with  the  intent,  at  the  time 


— 4 — 


the  party  receives  it,  to  convert  the  same  to  his 
own  use,  and  the  owner  of  the  property  parts  mere- 
ly with  the  possession,  and  not  with  the  title,  the 
offense  is  larceny.” 

Yon  will  note  that  LARCENY  is  felonious  stealing 
without  the  permission  or  knowledge  of  the  owner 
while  EMBEZZLEMENT  is  the  fraudulent  appropri- 
ation of  property  or  funds  by  a person  to  whom  it  has 
been  intrusted.  It  is  contended  by  some  attorneys  that 
the  terms  “Larceny”  and  “Embezzlement”  are  synony- 
mous. The  law,  however,  is  so  clear  that  I cannot  find 
any  justification  for  such  conclusion. 

THEFT-LARCENY. 

The  intention  of  the  clause  is  that  the  car  must 
be  stolen  by  a third  person  not  a party  to,  nor  entitled 
to  the  benefit  of  the  contract  of  insurance,  in  order  for 
the  claim  to  come  under  the  theft  clause  in  the  policy. 

The  courts  are  most  lenient  where  a minor  is  con- 
cerned and  especially  if  it  can  be  shown  that  an  in- 
surance company  is  the  only  one  injured  by  the  offense. 
This  has  been  proven  many  times  during  the  last  year 
when  boys  have  taken  cars  either  for  the  purpose  of 
a “joy  ride”  or  with  the  intent  to  steal  them. 

In  the  case  of  the  Hartford  Fire  Insurance  Com- 
pany vs.  Wimbish  (Ga.C.A.)  78  S.E.  (June  14,  1913) 
265 ; the  court  held  that  THEFT  is  synonymous  with 
LARCENY  and  the  intent  to  steal  is  necessary  to  the 
offense.  The  car  in  question  was  taken  for  a “joy 
ride”  and  returned  to  the  owner  but  there  never  was 
any  intention  of  stealing  the  car. 

State  vs.  Boyce  44  S.  W.  1043 ; 

People  vs.  Donohue  84  N.  Y.  438; 

Matthews  vs.  State  36  Texas  674; 

State  vs.  Stewart  67  Atl.  Rep.  786; 

If  a car  is  taken  and  returned,  but  in  a damaged 
condition,  has  a theft  been  committed,  and  is  the  com- 
pany liable  for  the  damage?  NO,  not  unless  it  can  be 
shown  that  there  was  an  “intent  to  steal.”  If  there 
was  no  intent  to  steal  the  car  it  was  not  a theft.  If 
the  car  is  not  returned  then  the  presumption  is  that 
theft  was  intended. 

Mich.  Com.  Ins.  Co.  vs.  Wills  45  Ins.  L.  J.  24 Y) 
In  the  case  of  People  vs.  Campbell,  59  Pac.  Rep. 
593,  the  Supreme  Court  of  California  held  that  there 
can  only  be  LARCENY  or  THEFT  if  the  possession  of 
the  article  in  question  is  originally  secured  with  the 
fraudulent  purpose  of  running  off  with  it. 


— 5 — 


It  is  incumbent  upon  the  Insured  to  show  that  the 
car  was  taken  with  felonious  intent  to  deprive  him  of  it 
and  by  some  person  other  than  those  “in  the  employ- 
ment, service  or  household  of  the  insured.’ ’ 

Kansas  City  Regal  Auto  Co.  vs.  Old  Colony  45 
• Ins.  L.  J.  778;  174  Southwestern  Rep.  (April 

7,  1915)  153; 

Rush  vs.  Boston  Ins.  Co.  150  N.  Y.  Supp.  (Jan. 
14,  1915)  457; 

The  Supreme  Court  of  Montana  hit  the  nail  square- 
ly on  the  head  in  the  case  of  the  Valley  Mercantile  Co. 
vs.  St.  Paul  Fire  and  Marine  Ins.  Co.  44  Insurance  Law 
Journal  715,  and  ruled,  “That,  to  constitute  the  crime 
of  Larceny,  the  intent  which  accompanies  the  act  of 
taking  must  be  the  criminal  intent  to  permanently  de- 
prive the  owner  of  his  property  and  without  which  the 
taking  would  be  a bare  trespass  or  criminal  injury.” 

The  above  case  was  a claim  made  for  theft  and 
the  evidence  showed  that  the  employees  of  a painter,  at 
whose  shop  the  automobile  had  been  left  for  repainting, 
after  working  hours  unlocked  the  front  door  and  took 
the  car  for  a “Joy  ride”  intending  to  bring  it  back  to 
the  shop  and  did  bring  it  back  after  it  had  been  dam- 
aged. The  court  held  that  the  taking,  though  wrong- 
ful, was  not  larceny  within  the  terms  of  the  policy. 

In  the  case  of  the  Federal  Insurance  Company  vs. 
Hiter  176  S.  W.  (Ky.)  210,  the  court  held,  that  a theft 
had  been  committed  where  a person  borrowed  an  auto- 
mobile to  go  to  a certain  place  and  never  returned  it 
to  the  owner,  but  abandoned  it  in  a remote  section  of 
a distant  State  in  a badly  damaged  condition  without 
notifying  the  owner  where  it  might  be  found.  Un- 
doubtedly the  intent  to  steal  was  clearly  shown  and 
proven. 

An  owner  of  an  automobile,  who  placed  it  in  a 
garage  of  a third  person  under  an  agreement  that  the 
third  person  should  pay  him  a specified  sum  therefor, 
payment  to  be  made  after  the  third  person  had  sold  the 
car,  parted  with  the  automobile  with  the  expectancy  of 
receiving  the  specified  sum  from  the  third  person,  with- 
in Sales  Act  (Consol.  Laws,  c.  41)  100,  as  added  by 
taws  1911,  c.  571,  providing  that,  when  goods  are 
delivered  to  the  buyer  on  sale  or  return,  the  property 
passes  to  the  buyer  on  delivery,  and  the  act  of  the  third 
person  in  disposing  of  the  automobile  on  the  same  day 
for  a less  sum  and  converting  the  proceeds  to  his  own 
use  is  not  a “THEFT,  ROBBERY,  or  PILFERAGE,” 


within  a policy  insuring  the  automobile  against  loss  by 
theft,  robbery,  or  pilferage. 

Siegel  vs.  Union  Assur.  Society,  City  Court  of 
New  York.  (May,  1915,)  N.  Y.  Supp.  662; 

The  above  case  shows  clearly  that  in  order  for  a 
THEFT  to  be  committed,  the  property  must  be  taken 
without  the  consent  of  the  owner,  otherwise  it  would 
be  embezzlement. 

EMBEZZLEMENT. 

It  has  happened  that  the  purchaser,  after  making  a 
payment,  has  run  away  with  the  car  and  the  dealer 
has  made  a claim  for  the  balance  of  the  purchase  price 
under  the  theft  clause  in  the  policy. 

The  question  which  naturally  arises  is,  can  a man 
steal  that  which  was  turned  over  to  him  peacefully  and 
in  which  he  has  an  insurable  interest.  The  law  says 
that  he  must  take  the  property  without  the  knowledge 
or  consent  of  the  owner  and  the  intent  to  steal  must 
also  be  apparent.  It  cannot  be  said  the  purchaser  ob- 
tained the  car  without  the  consent  of  the  dealer  for 
he  was  given  full  possession  of  it.  It  would  therefore 
seem  that  the  purchaser  could  not  commit  theft  within 
the  meaning  of  the  code.  He  has,  however,  committed 
a “ breach  of  trust”  for  he  promised  to  either  pay  the 
balance  due  on  the  car  or  forfeit  his  possession  of  it, 
and  the  offense  would  be  EMBEZZLEMENT,  the  tak- 
ing of  property  voluntarily  intrusted  to  him  for  which 
he  agreed  to  do  certain  things. 

EMBEZZLEMENT  is  not  covered  under  the  policy 
and  it  never  was  intended  that  it  should  be  or  it  would 
have  been  incorporated  in  the  contract.  A policy  is 
not  a guarantee  that  a certain  debt  will  be  paid  nor  is 
an  insurance  company  a collection  agency.  If  theft 
and  embezzlement  could  be  considered  synonymous 
terms  then  a claim  for  theft  would  be  valid;  but,  the 
definition  in  the  code  is  so  clear  that  it  cannot  be  mis- 
understood. 

In  the  case  of  People  vs.  O’Brien  8 Cal.  App.  641,  it 
was  held  that  the  essential  elements  of  embezzlement 
are  the  fiduciary  relations  arising  wThere  one  intrusts 
property  to  another  and  the  fraudulent  appropriation 
of  the  property  by  the  latter.  One  of  the  most  essen- 
tial elements  in  the  offense  of  embezzlement  is  the  in- 
tent to  embezzle,  and  it  must  be  shown  that  the  prop* 
erty  was  taken  with  that  intent. 

People  vs.  Hemple  4 Cal.  App.  120; 


If  a company  wishes  to  write  this  sort  of  protec- 
tion for  a dealer  then  it  should  be  done  under  a sep- 
arate rider  clearly  setting  forth  that  in  the  event  that 
the  car  is  stolen  by  the  purchaser  the  company  will  be 
liable  for  the  balance  of  the  purchase  price;  provided, 
fliat  the  dealer  will  swear  to  a warrant  for  the  arrest 
of  the  purchaser,  and  further  that  the  car  is  not  recov- 
ered. If  recovered,  then  liable  only  for  the  damage 
to  the  car. 

TWENTY  FIVE  DOLLARS  DEDUCTIBLE. 

Lines  4,  5 and  6. 

The  policy  conditions,  lines  4,  5 and  6,  recite  that 
the  company  will  be  liable  for  losses  by  theft,  robbery 
or  pilferage  if  amounting  to  Twenty  five  Dollars  or 
more.  This  is  a just  provision  and  prevents  the  com- 
pany being  called  upon  to  pay  for  articles  which  have 
been  lost  and  not  stolen.  If  the  clause  were  not  in  the 
policy  we  would  be  paying  small  losses  which  occur  to 
most  cars  every  month.  The  clause  does  not  mean  that 
Twenty  five  Dollars  will  be  deducted  from  the  loss,  but, 
that  the  loss  must  aggregate,  after  all  discounts  have 
been  made,  more  than  Twenty  five  Dollars. 

For  the  payment  of  an  extra  premium,  companies 
will  give  full  coverage. 

TRANSPORTATION. 

Lines  1 to  3. 

A transportation  certificate  of  insurance,  in  the 
margin  of  the  certificate,  contained  the  following 
words:  “This  insurance  is  only  against  loss  or  dam- 
age by  fire,  collision  or  derailment  on  land,  and  marine 
perils  while  on  ferries  and  transfers.”  In  the  body  of 
the  certificate  it  was  provided:  “Shipped  by  auto- 
mobile truck  * * * to  destination  * * * cov- 

ering only  while  in  transit  by  land.”  While  the  prop- 
erty was  in  the  course  of  tranportation  by  automobile 
truck  the  wheels  of  the  truck  skidded  into  the  gutter, 
causing  the  truck  to  capsize  and  damage  the  property 
insured.  Held,  That  the  skidding  of  the  hind  wheels 
of  the  truck  into  the  gutter  could  not  be  considered  a 
“derailment,”  as  such  word  is  defined,  as  the  “act  of 
going  off,  or  state  of  being  off  the  rails  of  a railroad.” 

Graham  vs.  Ins.  Co.  of  North  America  (Mass. 
S.  J.  C.)  ; 


— 8 — 


MEASURE  OF  DAMAGE. 

Lines  9 to  17. 

“This  Company  shall  not  be  liable  beyond  the 
actual  cash  value  of  the  property  at  the  time  any 
loss  or  damage  occurs,  and  the  loss  or  damage  shall 
be  ascertained  or  estimated  according  to  such  ac- 
tual cash  value,  with  proper  deduction  for  depre- 
ciation however  caused,  and  shall  in  no  event  ex- 
ceed what  it  would  then  cost  the  insured  to  repaid 
or  replace  the  same  with  material  of  like  kind  and 
quality;  such  ascertainment  or  estimate  shall  be 
made  by  the  insured  and  this  Company,  or,  if  they 
differ  then  by  Appraisers  as  hereinafter  provided. 
It  shall  be  optional  with  this  Company  to  take  all, 
or  any  part,  of  the  property  at  such  ascertained  of 
appraised  value,  and  also  to  repair,  rebuild,  or  re- 
place the  property  lost  or  damaged  with  other  of 
like  kind  and  quality  within  a reasonable  time,  on 
giving  notice,  within  thirty  (30)  days  after  the 
receipt  of  sworn  statement  of  loss  herein  required, 
of  its  intention  so  to  do ; but  there  can  be  no  aban- 
donment to  this  Company  of  the  property  de- 
scribed.” 

The  Policy  states  clearly  that  the  Company  will  not 
be  liable  beyond  the  ACTUAL  CASH  VALUE  of  the 
property  at  the  time  any  loss  or  damage  occurs,  and 
the  loss  or  damage  shall  be  ascertained  or  estimated  ac- 
cording to  such  actual  cash  value  with  proper  deduc- 
tion for  DEPRECIATION  however  caused.  It  is  the 
same  clause  as  found  in  Fire  Insurance  policies  and 
has  been  ruled  upon  by  all  courts  and  held  to  be  a 
valid  and  fair  stipulation.  The  insured  is  not  entitled 
to  more  than  the  actual  cash  value  at  the  time  of  the 
loss. 

Jones  vs.  Orient  Ins.  Co.  45  Ins.  L.  J.  200 ; 

Where  the  damage  is  small  and  it  would  be  dan- 
gerous to  replace  with  any  but  new  parts,  no  deprecia- 
tion can  be  deducted.  This  rule,  however,  does  not 
apply  to  tires,  bodies  or  any  material  part  of  the  car 
which  has  been  used  and  upon  which  a natural  depre- 
ciation can  be  shown. 

The  Company  must  be  allowed  to  have  the  repairs 
made  if  it  so  elects.  It  is  better  in  all  cases  to  agre& 
upon  the  loss  and  damage  and  allow  the  insured  to 
have  the  repairs  made  where  he  sees  fit.  If  the  car  is  a 
total  loss  and  over  insured,  the  Company  has  the  righ* 
to  replace  the  car.  If  it  is  necessary  to  go  into  an  ap- 
praisement, the  Company  has  the  right  to  take  the  car 
at  its  appraised  value. 


— 9 — 


Under  no  circumstances  can  the  car  be  abandoned 
to  the  Company  unless  it  wishes  to  take  it. 

SALVAGE. 

It  is  seldom  that  there  is  not  some  value  remain- 
tug  in  a burned  car.  An  Adjuster  should  see  that  the 
best  price  is  obtained  when  the  wreck  belongs  to  the 
company.  The  railroads  charge  the  same  freight  rate 
for  a wreck  as  for  a new  car  so  the  wreck  should  be 
disposed  of  at  the  place  where  the  loss  occurred  if  that 
is  possible. 

LIABILITY  REDUCED. 

The  policy  conditions,  lines  33  to  35,  read,  “In  the 
event  of  loss  or  damage  to  said  Automobile,  whether 
such  loss  or  damage  is  covered  by  this  policy  or  not, 
the  liability  of  this  Company  under  this  Policy  shall  be 
reduced  by  the  amount  of  such  loss  or  damage  until 
repairs  have  been  completed,  but  shall  then  attach  for 
the  full  amount  as  originally  written,  without  addi- 
tional premium.  ’ ’ This  clause  is  not  found  in  any  ‘ ‘ Fire 
Insurance  Policy”  of  the  present  day.  When  a com- 
pany pays  a partial  loss,  the  policy  is  reduced  that  much 
and  it  does  not  attach  again.  With  an  Automobile 
policy  it  is  reduced  during  the  time  the  repairs  are 
being  made  but  as  soon  as  they  are  completed,  the  policy 
again  attaches  for  the  amount  originally  written. 

RECOVERING,  SAVING  and  PRESERVING. 

Lines  36  to  38. 

“Any  act  of  the  insured  or  this  company,  or  its 
agents,  in  recovering,  saving  or  preserving  the 
property  described  herein  in  case  of  disaster,  shall 
be  considered  as  done  for  the  benefit  of  all  con- 
cerned and  without  prejudice  to  the  rights  of  either 
party,  and  all  reasonable  expenses  thus  incurred 
shall  constitute  a claim  under  this  policy.” 

This  clause  makes  it  necessary  for  the  Insured  to 
protect  the  Automobile  from  further  damage  and  any 
expense  incurred  will  be  paid  by  the  company.  It 
means  that  the  Insured  cannot  abandon  the  automobile 
on  the  road  side,  but  that  he  must  protect  it  from  theft 
^or  any  other  damage  which  might  occur  to  it. 

MISREPRESENTATION. 

• Lines  18  to  20. 

“This  entire  Policy  shall  be  void,  if  the  in- 
sured or  his  agent  has  concealed  or  misrepresent- 
ed, in  writing  or  otherwise,  any  material  fact  or 


— 10  — 


circumstance  concerning  this  insurance  or  the  sub- 
ject thereof;  or  if  the  insured  or  his  agent  shall 
make  any  attempt  to  defraud  this  Company  either 
before  or  after  a loss.” 

YEAR  of  MODEL. 

The  year  of  the  model  is  a very  important  matter 
to  the  Company  in  determining  the  desirability  of  the 
risk.  After  a car  is  four  years  old,  very  few  Companies" 
will  accept  the  insurance.  The  rate  of  premium  and 
the  amount  of  insurance  allowable  is  determined  by 
the  age  of  the  car  and  therefore  any  misrepresentation 
as  to  this  most  important  warranty  will  VOID  THE. 
POLICY. 

Statements  as  to  the  age  of  cars  are  held  to  be  war- 
ranties by  the  courts  and  the  insured  is  held  strictly 
accountable  therefor. 

Harris  vs.  St.  Paul  Ins.  Co.  (N.  Y.  S.  C.  App.) 

126  N.  Y.  Supp.  118 ; 

Miller  vs.  Com.  Union  Assur.  Co.  (Wash.  S.  C.) 

125  Pac.  Rep.  782; 

In  the  recent  case  of  Smith  vs.  American  Automo- 
bile Ins.  Co.  45  Insurance  Law  Journal  726  (175  S.  W. 
Rep.  113),  the  court  said  the  Company  had  a right  to 
prohibit  the  writing  of  cars  over  four  years  old.  “If 
the  fact  that  the  machine  is  five  years  old  instead  of 
two  is  not  material  to  the  risk,  we  cannot  well  see  what 
would  be,  and  if  it  was  represented  to  the  Company  to 
be  only  two  when  it  was  five  years  old,  and  the  Com- 
pany had  no  means  or  opportunity  of  knowing  any  dif- 
ferent, then  there  was  no  contract  of  insurance  entered 
into  by  the  Company  with  reference  to  the  car.  Hence 
we  think  the  representation  as  to  the  age  of  the  car  was 
material  to  the  risk  as  a matter  of  law.  The  principle 
involved  is  more  than  the  question  whether  the  fire 
was  attributable  to  the  age  of  the  car.  If  that  was  the 
question,  then,  of  course,  it  would  be  for  the  jury  to 
say  whether  the  misrepresentation  was  material  to  the 
risk.  But  the  materiality  depends  upon  whether,  had 
the  true  fact  been  known,  the  Company  would  have 
insured  it  at  all.” 

Boggs  vs.  American  Ins.  Co.  30  Mo.  63; 

The  court  also  held  in  this  case,  that  the  insurance  4 
having  been  placed  with  the  agent  of  the  company  by  a 
broker,  that  any  misrepresentation  made  by  the  broker 
were  representations  of  the  insured. 


— li- 


lt was  also  proven  in  this  case,  that  it  is  quite  im- 
possible to  determine  the  age  of  a car  by  looking  at  it. 

In  the  case  of  Farber  vs.  American  Automobile  Co. 
177  S.  W.  Rep.  675  (April  6th,  1915),  it  was  held,  That 
a representation  that  an  automobile  insured  against  fire 
m the  amount  of  $1750  cost  the  insured  $2000.00  is 
material  to  the  risk  insured  against,  and  is  a warranty 
in  a policy  stipulating  that  insured  warrants  statements 
ere  true. 

INSURABLE  INTEREST. 

Lines  20  and  21. 

Lines  20  and  21  of  the  policy  read,  “If  the  inter- 
est of  the  insured  in  the  property  be  other  than  un- 
conditional and  sole  ownership,  this  entire  policy  shall 
be  void.”  It  is  clear  that  the  insured  must  have  an 
absolute  title  to  the  car  or  the  policy  is  void  unless  the 
policy  is  properly  endorsed  showing  the  correct  title. 
The  title  to  cars  purchased  on  the  installment  plan  re- 
mains in  the  name  of  the  seller  until  the  last  payment 
is  made ; then  a bill  of  sale  is  given  for  the  car  and  the 
title  passes  to  the  purchaser. 

• Adjusters  should  insist  upon  seeing  the  bill  of  sale 
or  the  contract  IN  EVERY  INSTANCE  to  be  able  to 
state  to  the  company  just  what  is  the  title  of  the  in- 
sured, and  of  all  others  in  the  car.  If  the  loss  is  total, 
and  there  is  any  salvage  to  be  made  out  of  the  wreck, 
the  bill  of  sale  should  be  assigned  to  the  company. 

If  the  car  is  insured  in  the  names  of  the  seller  and 
purchaser,  then  if  a total  loss  is  paid,  the  seller  should 
give  the  company  a bill  of  sale  if  there  is  any  value  left 
in  the  wreck. 

CHATTEL  MORTGAGE. 

Line  21. 

The  policy  especially  provides  that  if  the  car  in- 
sured be  or  becomes  encumbered  by  any  lien  or  mort- 
gage that  the  entire  policy  shall  be  void.  All  courts 
have  ruled  on  this  clause  in  a fire  policy,  and  have  held 
that  a chattel  mortgage  increases  the  hazard  of  the 
risk,  and  that  the  policy  is  absolutely  void.  I believe 
that  they  will  hold  the  same  law  to  apply  to  the  clause 
in  the  automobile  policy.  It  is  therefore  necessary  that 
* if  a chattel  mortgage  exists,  or  if  there  is  a balance  due 
on  the  purchase  price,  a notation  of  same  must  be  en- 
dorsed on  the  policy. 

Oatman  vs.  Ins.  Co.  42  Ins.  L.  J.  1535 ; 

Baley  vs.  Ins.  Co.  80  N.  Y.  21,  36  Am.  Rep.  570; 

Hamilton  vs.  Ins.  Co.  (C.  C.  A.  Texas)  177  S.  W. 

173,  (May,  1915). 


— 12  — 


ASSIGNMENT  OF  POLICY. 

Lines  22  to  25. 

4 ‘ It  is  a condition  of  this  Policy  that  neither  it 
nor  any  part  thereof  shall  be  assigned,  unless  by 
consent  of  this  Company  endorsed  hereon,  and  in 
case  of  transfer  or  termination  of  any  interest  of 
the  Insured  other  than  by  the  death  of  an  Insured, 
or  any  change  in  the  nature  of  the  insurable  inter- 
est of  the  Insured  in  the  property  described  herein, _ 
either  by  sale  or  otherwise,  without  such  consent 
endorsed  hereon,  this  Policy  SHALL  FORTH- 
WITH CEASE  AND  TERMINATE.” 

The  above  condition  makes  it  necessary  that  any 
transfer  of  title  or  interest  must  be  endorsed  in  writ-  • 
ing  upon  the  policy.  This  refers  to  transfers  before  a 
loss  and  not  to  an  assignment  of  claim  which  is  made 
after  a loss  occurs  and  to  which  the  company’s  consent 
is  not  necessary. 

This  condition  is  found  in  all  policies  and  it  has 
been  ruled  upon  by  all  courts  and  held  to  be  a just  and 
valid  requirement  and  one  which  must  be  followed  or 
the  policy  is  void. 

Alkan  vs.  Ins.  Co.  53  Wis.  136, 11  Ins.  L.  J.  126 ; 

Carter  vs.  Ins.  Co.  12  Iowa  287 ; 

Greene  vs.  Ins.  Co.  84  N.  Y.  572; 

Wilson  vs.  Hill  3 Mete  (Mass.)  66; 

Bergson  vs.  Ins.  Co.  38  Cal.  541 ; 

Davis  vs.  Ins.  Co.  Iowa  134  N.  W.  860.  41  Ins. 

L.  J.  969; 

Kamm  vs.  Ins.  Co.  Mich.  134  N.  W.  999.  41  Ins. 

L.  J.  970; 

An  endorsement  on  the  policy  making  the  loss  pay- 
able to  another  than  the  insured  is  not  a transfer,  it 
merely  makes  him  an  appointee  to  receive  the  money 
due  the  insured  named  in  the  policy,  in  case  of  loss. 

Minturn  vs.  Ins.  Co.  10  Gray  (Mass.)  501; 

Williamson  vs.  Ins.  Co.  86  Wis.  393,  57  N.  W. 

46; 

Gilliat  vs.  Ins.  Co.  8 R.  I.  282,  91  Am.  Dec.  299 ; 

OTHER  INSURANCE. 

Lines  26  to  28. 

4 ‘If  at  the  time  a loss  occurs  there  be  any  * 
other  insurance  covering  against  the  risks  as- 
sumed by  this  policy  which  would  attach  if  this 
insurance  had  not  been  effected,  and  if  such  other 
insurance  has  been  effected  without  the  special  con- 
sent of  this  Company  endorsed  hereon,  then,  in 
that  event,  this  insurance  SHALL  BE  NULL  AND 
VOID.” 


— 13  — 


It  is  necessary  that  written  consent  for  other  in- 
surance be  endorsed  on  the  policy,  or  the  policy  is  void. 
This  clause  is  very  clear  and  the  courts  will  uphold  it. 

The  clause  refers  to  any  insurance  which  may  be 
in  force  at  the  time  of  the  loss,  but,  to  be  OTHER  IN- 
SURANCE it  must  be  for  the  same  party,  on  the  same 
interest,  in  the  same  property. 

A policy  covering  the  interest  of  the  purchaser  and 
another  covering  the  interest  of  the  seller  would  not  be 
other  insurance  as  they  would  cover  different  interests. 
The  policies  should  contribute  with  each  other  in  the 
payment  of  a loss,  but  there  is  no  clause  in  the  policy 
compelling  contribution. 

OTHER  INSURANCE  without  consent,. 

POLICY  VOID. 

First  Nat.  Bk.  vs.  Ins.  Co.  (N.  Dak.)  41  Ins. 

L.  J.  899 ; 

Baker  vs.  Ins.  Co.  12  Gray  Mass.  265 ; 

Wensel  vs.  Ins.  Co.  Iowa  35  Ins.  L.  J.  115; 

Cleaver  vs.  Ins.  Co.  65  Mich.  527,  71,  414; 

Sheldon  vs.  Ins.  Co.  22  Conn.  235 ; 

Fowler  vs.  Ins.  Co.  116  N.  Y.  389 ; 

CARRYING  PASSENGERS. 

Lines  29  to  32. 

“It  is  a condition  of  this  policy  that  the  auto- 
mobile hereby  insured  shall  not  be  used  for  carry- 
ing passengers  for  compensation,  nor  rented,  nor 
leased,  nor  operated  in  any  race  or  speed  contest 
during  the  term  of  this  policy,  unless  assented  to 
by  this  company  in  writing.  In  the  event  of  viola- 
tion of  any  of  these  conditions,  this  policy  shall 
forthwith  cease  and  terminate.” 

The  question  is  always  asked  of  the  applicant  for 
automobile  insurance,  whether  the  c&r  is  used  for  pleas- 
ure, business  or  hire,  as  the  desirability  and  acceptance 
of  the  risk  is  governed  by  this  information.  It  is  one 
of  the  policy  conditions  and  is  therefore  a warranty  by 
the  insured.  Certainly  when  a company  insures  a car 
with  the  understanding  that  it  is  not  to  be  used  for 
carrying  passengers,  it  should  be  protected  by  the 
^courts,  and  the  representation  made  by  the  Insured 
should  be  held  to  be  a warranty. 

Unfortunately  the  few  cases  that  have  been  decided 
have  not  been  favorable  to  the  company. 

In  the  case  of  the  Commercial  Union  Insurance 
Company  vs.  Hill  (Texas  C.  C.  A.)  167  S.  W.  Rep.  (July 
22,  1914)  1095;  where  the  policy  contained  the  follow- 


14  — 


ing  clause:  ‘‘It  is  warranted  by  the  insured  that  the 
automobile  hereby  insured  during  the  term  of  this 
policy  shall  not  be  used  for  carrying  passengers  for 
compensation,  and  that  it  shall  not  be  rented  nor 
leased.”  The  evidence  in  this  case  showed  that  on  two 
or  three  afternoons  the  Insured’s  son  used  the  car, 
without  his  knowledge,  for  carrying  passengers  for  hire, 
and  yet  the  court  held  that  the  warranty  was  not 
breached  by  the  use  of  the  car.  What  was  intended  by 
the  clause  was  that  the  automobile  should  not  be  con- 
tinuously used  for  this  purpose  for  any  length  of  time. 

In  the  case  of  Elder  vs.  Federal  Insurance  Com- 
pany, 42  Insurance  Law  Journal  524,  the  court  took  a 
different  view  on  account  of  knowledge  of  the  insured.  * 
It  was  proven  in  this  case,  that  the  car  was  taken  with 
the  knowledge  and  consent  of  the  insured,  and  it  was 
held  that  the  policy  was  void,  and  that  the  warranty, 
that  the  car  should  not  be  used  for  carrying  passen- 
gers, had  been  violated. 

In  another  case  the  policy  provided  that  the  auto 
thereby  insured  “will  not  be  rented  or  used  for  pas- 
senger service  of  any  kind  for  hire.”  The  court  held, 
That  by  this  clause  something  of  a more  permanent  na- 
ture than  a single  act  of  renting  or  hiring  was  con- 
templated ; hence  the  single  rental  of  the  car  to  convey 
some  hunters  into  the  country,  where  such  service  has 
been  completed,  would  not  avoid  recovery. 

The  object  of  a policy  being  to  afford  indemnity 
against  loss,  it  should  be  so  construed  as  to  effectuate 
that  purpose  rather  than  in  a way  which  will  defeat  it. 

Crowell  vs.  Maryland  Motor  Car  Ins.  Co.  (N. 

C.  S.  C.)  85  Southeastern  Reporter  (May 
22,  1915)  37; 

SUBROGATION. 

Lines  45  to  48. 

“If  this  Company  shall  claim  that  the  loss  or 
damage  was  caused  by  the  act  or  neglect  of  any 
person  or  corporation,  private  or  municipal,  this 
Company  shall,  on  payment  of  the  loss,  be  subro- 
gated to  the  extent  of  such  payment  to  all  right  of 
recovery  by  the  insured  for  the  loss  resulting  there- 
from, and  such  right  shall  be  assigned  to  this  Com-  * 
pany  by  the  insured  on  receiving  such  payment.” 

Where  the  insured  recovered  damages  for  personal 
injuries  from  a Railroad  Company  as  a result  of  a col- 
lision, it  was  held  that  the  recovery  in  the  personal  in- 
jury action  would  not  bar  an  action  by  the  Insurance 


— 15  — 


Company  as  Subrogee  to  recover  the  damage  due  to  the 
Automobile. 

Underwriters  at  Lloyds  Ins.  Co.  vs.  Vickburg 
Traction  Co.  63  So.  Rep.  (Dec.  27th,  1913) 
455; 

Maryland  Motor  Car  Co.  vs.  Haggard  (Tex. 
C.  C.  A.)  168  S.  W.  Rep.  (August  19,  1914) 
1011; 

INVASION. 

It  is  a condition  of  this  policy  that  this  company 
shall  not  be  liable  for  loss  or  damage  which  may  be 
caused  directly  or  indirectly  by  invasion,  insurrection, 
riot,  civil  war,  or  commotion,  or  military  or  usurped 
power. 

This  could  not  be  more  plainly  worded  and  the 
courts  will  uphold  it. 

Hocking  vs.  British  America  (Wash.)  40  Ins. 
L.  J.  799,  113  Pac.  259 ; 

Conner  vs.  Manchester  Ins.  Co.,  130  Fed.  743; 

Civil  Code  Cal.  2606. 

CANCELLATION. 

Lines  52  to  56. 

“This  Policy  shall  be  cancelled  at  any  time  at 
the  request  of  the  insured;  or  by  the  Company  by 
giving  ten  (10)  days’  notice  of  such  cancellation. 
If  this  Policy  shall  be  cancelled  as  hereinbefore 
provided,  or  become  void  or  cease,  the  premium 
having  been  actually  paid,  the  unearned  portion 
shall  be  returned  on  surrender  of  this  Policy  or  last 
Renewal,  this  Company  retaining  the  customary 
short  rate ; except  that  when  this  Policy  is  can- 
celled by  this  Company  by  giving  notice  it  shall 
retain  only  the  pro  rata  premium.” 

This  policy  condition  differs  from  the  one  in  the 
California  Standard  policy  as  a written  notice  is  not 
required.  It  is  also  silent  as  to  the  interest  of  a payee 
or  mortgagee.  The  condition  is  the  same  as  that  in 
the  New  York  Standard  form.  It  is  necessary  to  serve 
the  insured  with  notice  of  cancellation,  but  it  may  be 
either  verbal  or  written.  If  verbal  it  is  necessary  to 
have  a witness.  The  unearned  portion  of  the  premium 
* MUST  BE  RETURNED  with  the  notice  of  cancella- 
tion as  the  courts  hold  that  “The  return  premium  is 
the  essential  part  of  the  conditions  to  be  performed.  It 
is  pre-requisite  to  the  right  of  terminating  the  risk.” 
Notice  without  a tender  or  return  of  the  premium  would 
amount  to  nothing. 


— 16  — 


If  the  policy  is  payable  to  a third  party  notice 
must  also  be  given  to  such  payee,  but  it  is  not  necessary 
to  tender  the  return  premium  to  the  third  party  unless 
the  premium  was  paid  by  such  party. 

Notice  to  an  agent  is  not  sufficient  notice  to  cancel. 
It  must  be  to  the  insured  and  payee. 

S.  Corn  & Son  vs.  Pelican  17  Ins.  L.  J.  477 ; 

Niagara  F.  Ins.  Co.  vs.  Raden  19  Ins.  L.  J.  1015 ; 

Watertown  F.  Ins.  Co.  vs.  Rust  21  Ins.  L.  J. 

1053; 

Wis.  Cent.  Ry.  Co.  vs.  Phoenix  34  Ins.  L.  J.  405 ; 

INSUREDS’  DUTY  AFTER  LOSS. 

Lines  59  to  67. 

“In  the  event  of  loss  or  damage  the  insured 
shall  forthwith  give  notice  thereof  in  writing  to 
this  Company  or  the  authorized  agent  who  issued 
this  policy  and  protect  the  property  from  further 
loss  or  damage;  and  within  sixty  (60)  days  there- 
after, unless  such  time  is  extended  in  writing  by 
this  Company,  shall  render  a statement  to  this 
Company,  signed  and  sworn  to  by  said  insured, 
stating  the  knowledge  and  belief  of  the  insured 
as  to  the  time  and  cause  of  the  loss  or  damage; 
the  interest  of  the  insured  and  of  all  others  in  the 
property;  and  the  insured,  as  often  as  required, 
shall  exhibit  to  any  person  designated  by  this  Com- 
pany all  that  remains  of  any  property  herein  de- 
scribed, and  submit  to  examinations  under  oath  by 
any  person  named  by  this  Company,  and  subscribe 
the  same ; and,  as  often  as  required  shall  produce 
for  examination  all  books  of  account,  bills,  invoices, 
and  other  vouchers,  or  certified  copies  thereof  if 
originals  be  lost,  at  such  reasonable  place  as  may 
be  designated  by  this  company  or  its  representa- 
tive, and  shall  permit  extracts  and  copies  thereof 
to  be  made.” 

These  conditions  are  practically  the  same  as  in  all 
fire  insurance  policies,  except  that  no  reference  is  made 
to  other  insurance,  and  they  must  be  complied  with  be- 
fore a suit  can  be  commenced  unless  waived  by  the 
Company  or  its  Adjuster. 

PROOFS  OF  LOSS  MUST  BE  MADE  BY  INSURED. 

Bruce  vs.  Ins.  Co.  24  Ore.  486,  34  Pac.  Rep.  16 ; 

Shapiro  vs.  Ins.  Co.  51  Minn.  239,  22  Ins.  L.  J. 

310; 

McDermott  vs.  Ins.  Co.  44  N.  Y.  696; 

McCormick  vs.  Ins.  Co.  78  Cal.  468,  21  Pac.  Rep. 

14; 

Horwitz  vs.  Ins.  Co.  45  Ins.  L.  J.  189 ; 


— 17  — 


STATEMENT  MUST  BE  FURNISHED 
WITHIN  60  DAYS  or  there  can  be  no  recovery. 

Blossom  vs.  Ins.  Co.  64  N.  Y.  162 ; 

White  vs.  Home  Ins.  Co.  128  Cal.  131,  60  Pac. 

Rep.  666 ; 

► PROOFS  where  served. 

Under  this  policy  proof  of  loss  may  be  served  upon 
the  Agent  or  the  Company,  but  under  all  other  forms, 

► it  must  be  served  upon  the  company.  The  courts  hold 
that  proof  may  be  served  on  either  the  agent  or  the 
company. 

A DENIAL  OF  LIABILITY  WAIVES  PROOF  OF 
LOSS. 

Flaherty  vs.  Ins.  Co.  46  N.  Y.  Supp.  934 ; 

Sproul  vs.  Ins.  Co.  33  Ore.  98,  54  Pac.  180; 

Bank  of  Anderson  vs.  Ins.  Co.  Cal.  Ill  Pac. 

507; 

Farnum  vs.  Ins.  Co.  83  Cal.  261,  23  Pac.  180 ; 

STATEMENT. 

Rendering  a statement  setting  forth  the  value 
of  the  property  insured,  the  interest  of  the  insured 
therein,  etc.,  as  required  by  the  Policy,  is  a con- 
dition precedent  to  the  right  to  recover  for  a loss. 

Bennett  vs.  Ins.  Co.  Mass  39  Ins.  L.  J.  822 ; 

Davis  vs.  Ins.  Co.  Wash.  38  Ins.  L.  J.  143; 

APPRAISEMENT. 

Lines  71  to  77. 

“In  the  event  of  disagreement  as  to  the  amount 
of  loss  or  damage  the  same  must  be  determined 
by  competent  and  disinterested  appraisers  before 
recovery  can  be  had  hereunder.  The  insured  and 
this  Company  shall  each  select  one,  and  the  two 
so  chosen  shall  then  select  a competent  and  dis- 
interested umpire.  Thereafter  the  appraisers  to- 
gether shall  estimate  and  appraise  the  loss  or  dam- 
age, stating  separately  sound  value  and  damage, 
and,  failing  to  agree,  shall  submit  their  differences 
to  the  umpire;  and  the  award  in  writing  of  any 
two  shall  determine  the  amount  of  such  loss  or 
damage ; the  parties  thereto  shall  pay  the  appraiser 
respectively  selected  by  them  and  shall  bear  equally 
the  expenses  of  the  appraisal  and  umpire.  ” 

This  appraisal  agreement  is  different  from  that  in 
the  California  Standard  policy  as  either  party  may  de- 
mand an  appraisement  while  under  the  California  form, 
€only  the  company  may  make  the  demand.  The  courts 
are  a unit  in  holding  that  an  appraisal,  when  properly 
made,  is  binding  upon  all  parties  and  that  the  award 
is  final  as  to  the  loss  or  damage.  An  appraisal  does  not, 


— 18  — 


however,  determine  the  liability  of  the  Company  and  a 
company  does  not  admit  liability  by  entering  into  one 
provided  it  did  not  know  that  the  conditions  of  the 
policy  had  been  violated.  If  a company  knows  that  its 
policy  is  void  through  information  obtained  from  the 
insured,  the  courts  will  hold  that  they  waived  the  void- 
ance  by  putting  the  insured  to  trouble  and  expense. 

A company  cannot  waive  what  it  has  no  knowledge  of, 
but  the  courts  rightly  hold  that  the  amount  of  loss  or  * 
damage  is  of  no  interest  to  the  company  if  they  do  not 
intend  to  pay. 

THE  AWARD  OF  ANY  TWO  SHALL  BE  BINDING. 

Stemmer  vs.  Ins.  Co.  33  Ore.  65,  53  Pac.  Rep. 
498; 

Strome  vs.  Ins.  Co.  47  N.  Y.  Supp.  481  and  162 
N.  Y.  627; 

Morley  vs.  Ins.  Co.  85  Mich.  210 ; 

Stockton  vs.  Ins.  Co.  98  Cal.  557,  33  Pac.  Rep. 
633; 

Mosness  vs.  Ins.  Co.  50  Minn.  341,  52  N.  W. 
932; 

Nincent  vs.  Ins.  Co.  120  Iowa  272,  94  N.  W. 
458; 

APPRAISERS  DETERMINE  LOSS  AND  DAMAGE, 
NOT  LIABILITY  OF  COMPANY. 

Wood  vs.  Humphrey  114  Mass.  185; 

White  vs.  Railroad  Co.  135  Mass.  216 ; 

Fisher  vs.  Ins.  Co.  95  Me.  486,  50  Atl.  428 ; 

COMPANY  MAY  TAKE  ANY  OR  ALL  AT  ITS  AP- 
PRAISED VALUE. 

Hamilton  vs.  Ins.  Co.  136  U.  S.  242 ; 

Hamilton  vs.  Home  Ins.  Co.  137  U.  S.  370; 

WAIVER. 

Lines  78-79. 

“This  Company  shall  not  be  held  to  have 
waived  any  provision  or  condition  of  this  policy 
or  any  forfeiture  thereof  by  any  requirement,  act 
or  proceeding  on  its  part  relating  to  the  appraisal 
or  to  any  examination  herein  provided  for.”  -• 

This  is  a “Non-waiver  agreement”  and  it  is  as 
good  as  any  separate  agreement.  It  will  hold  provided  ^ 
the  company  did  not  know  of  the  voidance  of  the  policy. 

If  it  did  know  and  thereafter  put  the  insured  to  any 
trouble  or  expense,  it  will  not  hold. 


— 19  — 


WHEN  SUIT  MAY  BE  COMMENCED. 

Lines  83  to  87. 

“No  suit  or  action  on  this  Policy,  for  the  re- 
covery of  any  claim,  shall  be  sustainable  in  any 
court  of  law  or  equity  unless  the  insured  shall 
have  fully  complied  with  all  the  foregoing  require- 
ments, nor  unless  commenced  within  twelve  (12) 
months  next  after  the  happening  of  the  loss,  pro- 

♦ vided  that  where  such  limitation  of  time  is  pro- 
hibited by  the  laws  of  the  State  wherein  this  Policy 
is  issued,  then  in  that  event  no  suit  or  action  under 
this  Policy  shall  be  sustainable  unless  commenced 
within  the  shortest  limitation  permitted  under  the 
laws  of  such  State.  ” 

The  law  of  the  State  of  California  allows  fifteen 
(15)  months  after  the  date  of  the  fire  and  therefore 
that  period  would  apply  to  an  Automobile  contract. 
Idaho  and  Montana  allow  four  (4)  years.  Washington 
twelve  (12)  months. 

This  policy  condition  has  been  held  valid  by  all 
courts  and  it  must  be  complied  with  before  suit  can  be 
maintained. 

Garretson  vs.  Ins.  Co.  114  Iowa  17,  86  N.  W.  32 ; 
Roach  vs.  Ins.  Co.  30  N.  Y.  546; 

Fullam  vs.  Ins.  Co.  7 Gray  (Mass.)  51; 

DENIAL  OF  LIABILITY.  If  Company  denies  lia- 
bility suit  may  be  commenced  at  once. 

COLLISION. 

Automobiles  are  insured  against  damage  by  or  from 
collision  by  attaching  a rider  to  the  regular  policy.  The 
clause  reads  as  follows: 

“By  being  in  collision  during  the  period  in- 
sured with  any  other  automobile,  vehicle  or  object, 
excluding  (1)  damage  or  loss  to  tires  (unless  the 
total  damage  caused  by  the  collision  to  the  automo- 
bile herein  described  exceeds  the  sum  of  $200,  (2) 
damage  caused  by  striking  any  portion  of  the 
roadbed  or  by  striking  the  rails  or  ties  of  street, 
steam  or  electric  railroad,  (3)  loss  or  damage 
while  the  automobile  insured  is  being  operated  in 
any  race  or  speed  contest,  or  while  being  operated 
t by  any  person  under  the  age  of  sixteen  years  or 
under  the  age  limit  fixed  by  law.” 

“COLLISION”  according  to  the  courts  means  the 

* act  of  colliding  and  imparts  striking  together,  violent 
contact ; but  both  bodies  need  not  be  in  motion. 

In  the  case  of  Harris  vs.  American  Casualty  Co. 
(N.  J.  C.  C.  A.)  85  Atl.  Rep.  (Jan.  2,  1915)  194;  it  was 


— 20  — 


held  that  water  and  land  are  objects  and  an  automobile 
which  runs  into  either  or  both,  collides  with  an  object 
or  objects  and  therefore  the  damage  is  covered  under 
the  clause. 

A very  interesting  case  was  that  of  Hardinfburg 
vs.  Employers  Liability  Corp.  (N.  Y.  City  Ct.)  138  N.  Y. 
Supp.  (Jan.  6,  1913)  662;  It  appears  from  the  evidence 
that  the  insured  on  meeting  a team  on  the  public  high- 
way was  compelled  to  steer  his  automobile  into  the 
grass.  In  endeavoring  to  return  to  the  roadbed  the 
automobile  struck  the  shoulder  of  the  roadbed  and 
overturned.  The  court  held,  there  was  not  a collision 
within  the  meaning  of  the  policy. 

In  the  case  of  Stix  vs.  Travelers  157  S.  W.  Rep. 
(July  16,  1913)  870;  the  court  held  that  a gutter  on  the 
side  of  a roadbed,  for  the  purpose  of  carrying  off  water, 
was  not  part  of  the  roadbed  and  therefore  the  skidding 
of  a car  into  the  gutter,  which  resulted  in  damage  to 
the  car,  was  covered  under  the  policy. 

In  the  case  of  Wettengel  vs.  U.  S.  Lloyds  44  Ins. 
L.  J.  197,  it  was  shown  that  the  automobile  insured  left 
the  main  road  on  which  it  was  being  driven  and  ran 
down  a bank  of  three  or  four  feet  into  the  river.  Held, 
That  the  accident  was  not  covered  by  the  policy.  In 
order  to  bring  the  case  within  the  policy  there  must 
have  been  first,  a collision;  second,  the  collision  must 
have  been  with  another  automobile,  vehicle  or  some 
similar  object;  and,  third,  it  must  not  have  been  with 
any  portion  of  the  roadbed. 

An  automobile  driven  into  a hole  six  inches  deep 
and  eighteen  inches  wide,  between  car  tracks,  is  not  a 
collision  with  an  object  as  is  contemplated  by  the  par- 
ties to  an  insurance  contract  containing  a collision 
clause. 

Dougherty  vs.  Ins.  of  N.  A.  38  Penn.  Co.  Court 
Refs.  (Jan.  1911)  119; 

CONCLUSION. 

In  conclusion  let  me  urge  upon  agents  and  com- 
panies the  necessity  of  insisting  that  applications  be 
signed  by  the  Insured  and  with  every  question  answered 
fully.  The  principal  reason  being  that  the  automobile 
may  never  be  seen  again  after  the  insurance  is  written. 

The  amount  allowed,  the  rate  and  desirability  of 
the  risk  depend  entirely  upon  the  answers  given  by  the 
applicant.  Misrepresentation  voids  the  policy,  so  it  is 
essential  that  only  true  statements  be  made.  The  ad- 


— 21  — 


juster  must  take  the  contract  as  he  finds  it,  and,  if  the 
policy  is  void  he  must  stand  upon  it.  Agents  cannot 
expect  that  companies  will  waive  misrepresentation,  for 
their  acceptance  of  the  risk  was  based  solely  upon  the 
statements  of  the  Insured.  The  automobile  policy  is 
* a unilateral  contract  and  therefore  the  courts  will  not 
permit  it  to  be  voided  if  there  is  any  way  of  construing 
the  wording  in  favor  of  the  Insured. 

Nearly  all  matters  which  arise  are  ‘‘questions  of 
fact”  and  these  must  be  submitted  to  a jury,  if  one  be 
impanelled.  If  questions  are  not  asked  the  Insured 
when  the  application  is  taken,  the  company  is  pre- 
sumed to  have  waived  its  objections. 

Where  the  automobile  is  mortgaged  before  the 
policy  is  written,  and  no  questions  are  asked  the 
Insured  regarding  such  matters,  the  company  is  con- 
sidered to  have  waived  the  condition  in  the  policy  re- 
lating to  encumbrances,  therefore  make  one  invariable 
rule — never  write  an  automobile  policy  unless  the  car  is 
seen  and  the  Insured  asked  every  question  on  the  appli- 
cation and  his  signature  obtained  to  it.  If  this  course 
is  followed  it  will  save  the  company  many  bad  losses, 
and  the  agent  much  uneasiness  and  loss  of  clients,  for 
one  claim  not  paid  may  result  in  the  loss  of  considerable 
business.  The  details  justifying  the  Company’s  non- 
payment of  an  unjust  claim  are  seldom  given  the  pub- 
licity which  would  neutralize  the  misstatements  of  an 
unreasonable  client. 

T.  H.  WILLIAMS. 


\ 


INDEX  TO 

AUTOMOBILE  FIRE  AND  THEFT  POLICY 

Line  of 

Page  A policy 

8 — ABANDONMENT  of  property  to  company  not  per- 
mitted   16 

ACCEPTANCE  of  policy,  subject  to  its  conditions.  . . 

......... Page  two 

16— ACCOUNT  BOOKS  to  be  produced 65 

19 — ACTION  to  be  brought  within  15  months 83 

8— ACTUAL  CASH  VALUE  is  limit  of  liability 9 

AGENT  must  have  written  authority 57 

AGENTS  power  to  waive  conditions Page  two 

12— AGREEMENTS,  others  may  be  added 2-22 

16 —  AMOUNT  CLAIMED,  details  in  Inventory  and 

proof  59 

17—  APPOINTMENT  of  APPRAISERS 71 

17— APPRAISAL  . 71 

8 — APPRAISED  VALUE,  company  may  take  property 

at  13 

17—  APPRAISEMENT,  expenses  of 71 

18—  APPRAISEMENT,  not  a waiver 78 

17— APPRAISEMENT  of  the  loss,  when 71 

17 — APPRAISERS,  how  chosen 71 

17 — do  duty  of 71 

17 — do  to  be  competent  and  disinterested. . . 71 

17 — do  to  select  Umpire 71 

8—  ASCERTAINMENT  of  amount  of  loss 59 

18 —  ASSENTING  to  amount  of  loss  is  not  a waiver 78 

14 —  ASSIGNMENT  to  company  of  insured’s  rights 45 

12 — do  of  policy  before  loss  voids,  unless...  22 

9 —  AVOIDING  POLICY  by  concealment  or  fraud 18 

17 — AWARD  determines  amount  of  loss,  when 75 

17 — AWARD  must  be  in  writing 75 

13 —  AUTOMOBILE,  cannot  rent  unless  permission 

granted  29 

13 — AUTOMOBILE,  cannot  lease  unless  permission 

granted  29 

13 — AUTOMOBILE,  cannot  enter  races  unless  permission 

granted  29 

B 

16 — BELIEF  as  to  origin  of  fire  to  be  stated 62 

16 — BOOKS  of  account  to  be  produced 66 

16 —  BILLS  to  be  produced  for  examination 66 

7 —  BURNING  while  being  transported,  covered 3 

C 

15 —  CANCELLATION  when  and  how  effected 52 

13— CARRYING  PASSENGERS  not  allowed 29 

8—  CASH  VALUE  how  estimated * 9 

8 —  CASH  VALUE  is  limit  of  liability .9 

16 —  CERTIFIED  COPIES  of  records  to  be  produced 66 

12 — CHANGE  in  interest,  title,  etc.,  voids  policy,  unless. . 21 

17 —  CHARGES  of  umpire,  payment  of 76 

11 — CHATTEL  mortgage  voids  policy 21 

9 —  CIRCUMSTANCES,  misrepresentation  of,  voids 

policy  18 

15 — CIVIL  authority  no  loss  by 50 

15 — CIVIL  war  or  commotion,  not  liable  for  loss  by 50 

7 — COLLISION,  liable  for  during  transportation  by 

carrier  3 

19 —  COLLISION  covered  under  rider 

23 — COMMON  CARRIER  not  covered  by  policy 49 

17 —  COMPETENT  appraisers  to  be  chosen 71 

19 — COMPLIANCE  with  conditions  necessary  before  suit  83 

9 — CONCEALMENT  by  insured  voids 18 


— 24  — 


Line  of 

Page  policy 

CONDITIONS  are  part  of  the  contract Page  two 

18 — do  not  waived  by  appraisal, 

etc Page  two 

CONDITIONS  waived  only  by  endorsement 

,. Page  two 

13 — CONDITIONS  specially  referred  to 31 

16 — COPIES  of  books  of  account,  etc.,  may  be  made.  ...  65 

8 — COST  of  repair  is  limit  of  liability 9 

COUNTERSIGNATURE  of  policy  by  agent  neces- 
sary   Page  two 


D 

17 — DAMAGE  and  sound  value  to  be  stated  by  appraisers  71 


7 — DAMAGE  by  fire  and  theft  is  insured  against 1 

9 — DAMAGE — further — to  be  prevented 36 

15 —  DAYS  10  for  cancellation 52 

19 — DAYS  60  when  loss  payable  in 78 

16 —  DAYS  60  for  making  proofs  of  loss 59 

12 — DEATH  of  insured 23 

16 —  DELAY,  no  unnecessary — in  giving  notice  of  loss ....  59 

7 —  DERAILMENT  liable  when  being  transported 3 

8 —  DEPRECIATION  to  be  deducted 11 

17 —  DENIAL  of  liability  waives  proofs 

17 — DIFFERENCES  of  appraisers  to  be  submitted  to 

umpire  74 

17 — DISAGREEMENT  as  to  loss,  then  appraisement....  71 

8— DISCHARGE  of  liability  by  repair 9 

17 — DISINTERESTED  appraisers  to  be  chosen 71 

16 — DUTY  of  insured  in  case  of  loss 26-33-36-59 


£ 


6—  EMBEZZLEMENT,  not  liable  for 1 

11 —  ENCUMBRANCES,  see  chattel  mortgage 21 

12—  ENTIRE  POLICY  shall  be  void 18-22-29 

16 — EXAMINATION  of  books  to  be  permitted 65 

16 — do  of  insured  under  oath 64 

18 — do  or  appraisal  not  a waiver 78 

17 —  EXPENSES  of  appraisal  to  be  paid  by  company  and 

insured 76 

16 —  EXTRACT  and  copies  of  books  to  be  permitted 66 

7 —  EXPLOSION  company  liable  for 1 

EXTRA  BODIES  not  covered,  unless 7 

9 — EXPENSE  saving  property  covered  by  policy 36 

F 

17 —  FAILURE  of  appraisers  to  agree,  then  umpire 74 

17—  do  of  insurer  and  insured  to  agree 71 

9 — FALSE  swearing,  voids  policy 18 

19 —  FIFTEEN  months,  action  to  be  brought  within 85 

16 — FIRE,  belief  as  to  origin  of — to  be  stated 62 

14 —  FIRE  caused  by  neglect  of  third  parties 45 

7 — FIRE  loss  or  damage  is  covered 1 

9 — FRAUD  voids  policy 18 

19 — FULL  compliance  with  conditions  before  suit 83 

G 

7—  GENERAL  AVERAGE,  liable  for 3 

I 

11—  INCUMBRANCES,  see  chattel  mortgage 21 

12—  INSURANCE  void  when 18-22-26-29 

16 — INSURED’S  duty  in  case  of  loss 59 

15—  INSURRECTION,  not  liable  for 50 

8 —  INTENTION  to  repair  must  be  made  within  30  days  14 

16 —  INTEREST  of  insured  and  others  to  be  stated  in 

proofs 59 

9 —  INTEREST  of  insured  to  be  unconditional,  unless. . . 18 

15— INVASION  not  liable  for  loss  for 50 


— 23  — 

Line  of 

Page  policy 

16 — INVOICES  to  be  produced  for  examination 66 

11—  INSURABLE  interest 20 

K 

16 —  KNOWLEDGE  of  origin  of  fire  to  be  stated 62 

L 

* 4— LARCENY,  liable  for 1 

13 —  LEASED,  car  not  allowed  to  be  leased 29 

9 — LIABILITY  reduced  until  repairs  made 33 

9 — do  limit  of 3-7-9-33 

% 12 — do  none  unless  endorsement  made.  . .18-22-26-29 

17 —  LIABILITY,  denial  of  waives  proofs 1 

7—  LIGHTNING,  liable  for  damage 1 

8 —  LIKE  kind  of  material  for  repair 14 

8— LIMIT  of  liability 9 

17 — LOSS,  appraisement  of 71 

8 —  - do  ascertainment  of 9 

15 — do  by  civil  authority,  not  liable  for 50 

15 — do  by  civil  war  not  liable  for 50 

15 — ■ do  by  commotion  not  liable  for 50 

15 — do  by  military  power  not  liable  for 50 

7 — do  by  fire  is  covered 1 

7 — do  by  theft  when  over  $25  is  covered 1 

15 — do  by  invasion  not  liable  for 50 

15 — do  by  insurrection  not  liable  for 50 

15 — do  riot,  not  liable  for 50 

do  not  liable  for  robes,  extra  bodies,  unless 7 

16 — do  duty  of  insured  in  case  of 59 

17 — do  failure  to  agree  as  to  amount  of 71 

17 — do  fixed  by  award 71 

16 — do  notice  to  be  given,  when 59 

16 — do  of  original  books,  bills,  etc 65 

9 — do  when  not  liable  for 1-7-18-50 

19 — do  when  payable  in  60  days 80 

M 

8 —  MACHINERY  may  be  repaired,  rebuilt  or  replaced.  . 13 

9 —  MATERIAL  fact,  concealment  of,  voids 18 

8 — MATERIAL  for  repair — like  kind  and  quality 15 

12—  MATTERS  avoiding  policy 18-22-26-29 

8 —  MEASURE  of  damage 9 

15 —  MILITARY,  not  liable  for  loss  caused  by 50 

9—  MISREPRESENTATION  by  insured,  agent  or  broker, 

voids 18 

19 — MONTHS,  15 — within  which  to  sue 83 

N 

14 —  NEGLECT  of  third  parties — subrogation 45 

18 —  NON-WAIVER  by  appraisal  or  examination 78 

15 —  NOTICE  of  cancellation  10  days 52 

8 — do  of  intention  to  repair  within  30  days 15 

O 

16 —  OATH,  examination  under,  as  often  as  required 64 

OFFICER  has  no  power  to  waive  condition, 

except  Page  two 

8 — OPTIONS  of  company  in  case  of  loss,  to  repair,  etc. . 13 

16 —  ORIGIN  of  fire  to  be  stated  in  proof 62 

I 12— OTHER  INSURANCE  voids  policy 26 

11 —  OWNERSHIP  must  be  sole  and  unconditional,  unless  18 

P 

v 17 — PAY  of  appraisers  and  umpire 76 

19 —  PAYMENT  of  loss  when  in  60  days 78 

12 —  POLICY  void  unless  endorsement  made 22 

12 — POSSESSION,  change  of  voids  policy 22 

12— POLICY  VOID,  when 18-22-26-29 


— 26  — 

Line  of 

Page  policy 

13 — PASSENGERS  carried  for  pay  not  allowed 29 

15 — PBEMIUM  pro  rata  when  to  be  refunded.  52 

15 —  ■ do  short  rate  when  to  be  returned 52 

PERSONAL  effects  not  liable  for  unless 7 

7 —  PILFERAGE  liable  for  when  it  exceeds  $25 5 

16 —  PRODUCTION  of  books  of  account 65 

16 — PROOF  of  LOSS  must  be  signed  and  sworn  to 61 

9 — POLICY  will  attach  for  full  sum  when 33 

16 — PROOF  of  loss  must  be  made  within  60  days 59 

16 — do  of  loss  must  contain  what 59 

16 — do  of  loss  where  to  be  sent 61  ^ 

8 —  PROPERTY,  abandonment  of  not  permitted 16 

8 — do  may  be  taken  by  company 13  * 

do  not  insured  unless  mentioned 7 

8 — do  of  like  kind  and  quality  for  repairs...  15 

16 — do  remains  of  to  be  exhibited 64 

9 —  PROTECTION  of  property  by  insured  in  case  of 

loss  36 

18 —  PROVISIONS  of  policy  not  waived  by  appraisal...  78 

Q 

8 — QUALITY  of  material  for  repair 15 

R 

15 — RATES  for  cancellation.  Pro  rata  and  short  rate.  . . 52 

15 —  REFUND  of  premium  in  case  of  cancellation 52 

16 —  REMAINS  of  property  to  be  exhibited 64 

8 — REPAIR,  cost  of — is  limit  of  liability 13 

8 — do  discharges  liability 13 

8 — do  notice  of  intention  to  within  30  days 15 

8 — do  to  be  made  within  reasonable  time 15 

8—  REPLACING  discharges  liability 15 

9—  RECOVERY  of  car 36 

13 —  RENTAL  of  car  not  allowed 29 

19 —  REQUIREMENTS,  compliance  with  before  suit 83 

18 —  RIGHTS  of  company  not  waived  by  appraisal,  etc.  . . 78 

15 — RIOT,  not  liable  for  loss  by 50 

7 —  ROBBERY  liable  for  when  loss  over  $25 5 

ROBES  not  liable  for,  unless 7 

S 

8 —  SATISFACTION  of  liability  by  repair,  etc 9 

9 —  SAVING  of  property  after  a fire 36 

2 — SALVAGE  charges  liable  for  when  Insured  liable.  . . 4 

9 — SALVAGE  of  burned  car 

15 —  SHORT  rate  premium  due  when  Insured  cancels 52 

16 —  SIXTY  days  proofs  must  be  filed  within 60 

2 — SINKING  company  liable  for — transportation 3 

11 — SOLE  ownership,  necessary  unless  endorsement 20 

17 —  SOUND  value  and  damage  stated  separately  by  ap- 

praisers   74 

16 — STATEMENT  of  loss  to  be  in  writing  and  sworn  to . . 59 

16 —  STATEMENT  of  loss  to  contain  what 59 

STIPULATIONS  are  part  of  consideration  and  policy 

Page  two 

17—  SUBMISSION  of  differences  to  umpire 74 

14—  SUBROGATION  45 

16 — SUBSCRIBING  to  testimony  under  oath 64 

19 —  SUIT,  when  to  be  brought — 15  months 83 

15 —  SURRENDER  of  policy,  refund  of  premium 52 

2 — STRANDING  company  liable  for — transportation...  3 

T 

15 —  TENDER  of  unearned  premium  necessary  for  can- 

cellation   52 

16 —  TESTIMONY  to  be  subscribed  and  sworn  to 65 

4 — THEFT,  company  liable  for  when  exceeds  $25 1 

19 — TIME  for  payment  of  loss 78 


— 27  — 

Line  of 

Page  policy 

8 — TIME — reasonable — for  making  repairs 14 

16 —  TITLE,  change  of,  to  be  stated  in  proof 59 

12 — TITLE,  change  in  voids  policy 22 

7— TRANSPORTATION  1 

U 

17 —  UMPIRES  charges,  by  whom  paid 76 

* 17 — UMPIRE  to  be  competent  and  disinterested 73 

17 — UMPIRE  to  pass  on  differences  only 71 

17 —  UMPIRE,  when  and  how  chosen 71 

* 11 — UNCONDITIONAL  and  sole  ownership  necessary...  18 

> 16 — UNNECESSARY  delay  in  giving  notice  of  loss 59 

15 — USURPED  power,  company  not  liable  for  damage 

from  50 

V 

12 — VALID  or  invalid  insurance  voids  policy 26 

12— VOID,  when  policy  is 18-22-26-29 

12 — VOID,  when  policy  is  unless  otherwise  agreed.  .22-29-26 

W 

18 —  WAIVER,  none,  by  appraisal  or  examination 78 

15 — WAR,  not  liable  for  loss  caused  by 50 

12 — WRITTEN  agreement  for  other  insurance  necessary  26 
17 — WRITTEN  award  to  be  made 75 

7 — WHILE  being  transported 1 

WEARING  apparel  not  liable  for  unless 7 


* 


9 

4 


4 

- 

9 


